Transaction fees for Bitcoin have spiked to $19 due to the elevated demand for blockspace following the creation of NFTs using the Ordinals protocol. With the total amount of Inscriptions hitting 5,010,014 to date, the NFT craze has led to the total fees of Ordinals to hit ~$24,285,831, according to data by Dune Analytics — causing congestion and blockchain backlog.
Although Bitcoin miners are dramatically benefiting from the Ordinals surge, critics perceive Bitcoin NFTs as attacking the network, defacing the peer-to-peer financial network that the Bitcoin blockchain enables. In addition, the mountainous costs for Bitcoin transactions and longer confirmation times make it tricky for crypto enthusiasts to use Bitcoin for minor transactions, with Salvador’s Chivo ATM system being unstable due to costly gas fees.
Ordinals have provoked the widespread use of the Bitcoin network’s Taproot update, which was activated in 2021. This way of inscribing digital content on the Bitcoin blockchain has driven enormous hype, with vocal Ordinal advocates claiming that inscriptions are a game-changing experience for the NFT sphere, despite of the issues mentioned above.
Overriding Bitcoin Fees – A Possible Solution
Lightning Network allows Web3 users to transact using much smaller fees without waiting for confirmation on the underlying blockchain. Lightning users can quickly settle their Bitcoin transactions to the fundamental Bitcoin foundation whenever they wish, waiting for convenient times to dodge high fees and congestion. For this reason, the cryptocurrency exchange Binance is scoping ways to add Lightning features. Other exchanges like OKX, Kraken and Bitfinex already support this second-layer payment protocol built on a blockchain. Consequently, the number of Lightning channels and nodes has been descending over the past month, while the price of regular Bitcoin transactions is ever-increasing.
As more exchanges implement Lightning features, it will be interesting to see how the Bitcoin network adapts to the increasing demand for Ordinal NFTs and prevents such high-fee transactions.
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